India May Open Sub Deal to Private Yards

Dec. 13, 2012 - 06:06PM
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NEW DELHI — The Indian government has agreed to allow private local shipbuilders to participate in a tender, expected next year, to build six submarines for $12 billion, a Defence Ministry source said.

The Navy’s plan to add six submarines, called Project 75-1, had been accepted by the government in principle in 2011, but the formal tender had been withheld over the issue of private shipyard involvement, the source said. Under the plan, the first two subs would be acquired from foreign companies.

In a written reply to Parliament on Dec. 4, Indian Defence Minister A.K. Antony said the private sector is being associated “as per their capability and as per Joint Venture (JV) policy promulgated by Department of Defence Production,” Antony wrote.

It is unclear if this decision means private yard involvement is guaranteed or will simply be considered.

The Defence Acquisition Council (DAC), the ministry’s top weapon-buying agency, has approved construction of the six subs, which will be equipped with nuclear land attack missiles and air independent propulsion.

According to the proposal cleared by DAC in 2011, two submarines would be acquired from a selected foreign shipyard and the remaining four would be built by state-owned Mazagon Docks Ltd. (MDL) and Hindustan Shipyard Ltd. (HSL), based at Vishakhapatnam.

But India’s private-sector shipyards demanded they be considered for the project. Domestic shipyards Larsen & Toubro, Pipavav Shipyard and ABG Shipyards have been building a case that they have upgraded their facilities to handle warship and submarine construction.

Pipavav and Larsen & Toubro have struck separate memorandums of understanding with MDL to jointly build the submarines.

Meanwhile, the Navy’s submarine strength has fallen sharply from 21 vessels in the 1980s to 14 today as aging submarines had to be retired. The Navy wants to quickly increase its sub force as the Chinese have boosted their sub fleet to 65 vessels.

“It is actually a major, major cause of concern for us, which we continuously evaluate and work out our options and our strategies for,” he said.

The Indian Navy has to adapt its strategy to match the Chinese, he said.

The dispute between India and China involves the longest contested boundary in the world as China claims 92,000 square kilometers of Indian territory. The border is defined by a 4,056-kilometer Line of Actual Control (LAC), which is neither marked on the ground nor on mutually acceptable maps. Efforts to create a recognized LAC since the mid-1980s have made little headway.